Legal News

7th Cir. Revisits Tellabs ? A Milberg Weiss Win

By Peter Lattman

Last year when the Supreme Court issued its big securities-law ruling in Tellabs, our first headline was “Supremes Deliver Another Blow to Plaintiffs Securities Bar.” At first blush, the court’s 8-1 ruling appeared to be another blow to securities-fraud lawsuits at the hands of the Supremes. But after canvassing the legal beagles who pay close attention to this area, it seemed that the decision ain’t so bad for the plaintiffs bar.

It looks like they were right. The Seventh Circuit, which received the case back from the Supreme Court on remand, revisited the case. Judge Posner — yes, him again! — concluded that the plaintiffs stated a sufficient claim against Tellabs creating the “strong inference” of scienter, as defined by the Supreme Court. “It is possible to draw a strong inference of corporate scienter without being able to name the individuals who concocted and disseminated the fraud,” wrote Judge Posner. Click here for Judge Posner’s opinion, written in a lovely Palatino font.

In Tellabs, the justices considered how far Congress wanted to go in reining in strike suits through the 1995 PSLRA. That law required plaintiffs to state in their complaint facts giving rise to a strong inference that the defendant acted with intent to deceive. But it didn’t define the terms, and federal appeals courts interpreted them differently.

The ruling is a big win for the embattled plaintiffs’ firm Milberg Weiss, which brought the lawsuit against Tellabs.

Full post as published by Law Blog - WSJ.com on January 17, 2008 (boomark / email).